Good corporate governance

How does your business measure up?

A simple corporate health check around three key areas (CRO filings, minutes and registers) can make all the difference for ensuring your company remains up to date in today’s compliance focused environment.

Although numerous directors meetings may be held throughout the year it is also important that in each calendar year an Annual General Meeting (AGM) is formally convened and held. The requirement to hold an AGM is a statutory obligation for all multi member companies. The first AGM must be held within 18 months of the date of incorporation and thereafter once in every calendar year, with not more than 15 months elapsing between the holding of each AGM. It is also important to remember that the AGM must be held within 9 months of the financial year end.

The business conducted at the AGM will usually include:

Consideration of the Reports and Financial Statements

Re-appointment of the auditors and authorising the Directors to fix their remuneration

The election of directors in place of those retiring

Declaration of a final dividend

The consequence of not holding an AGM is that the company and every officer who is in default shall be guilty of an offence and liable to a fine. In practice this fine is seldom imposed but non-compliance with any aspect of the Companies Acts is not advisable.

For any company where the directors are also the shareholders, a straightforward, timesaving and practical way of remaining compliant when it comes to holding your company’s AGM is to convene it on the same day that the Reports and Financial Statements are being signed and this meeting can be held at short notice, subject to the consent of all the members.

It is also an opportunity to have your Annual Return completed and signed, registers reviewed and corporate records updated.

It must be remembered that no matter how small the company is, compliance is essential and it’s not just about filing the Company’s Annual Return and Reports and Financial Statements at the Companies Registration Office (CRO). Apart from recording appropriate minutes, another aspect of compliance is the maintenance of the statutory registers. These include the register of members, register of directors and secretaries, the register of directors and secretaries interests and the register of debenture holders. Often maintained with these statutory registers are the Registers of applications, allotments and transfers of shares and sealings.

Sample questions:

CRO filings:

Are our company’s filings and Memorandum and Articles of Association up to date?

Are we disclosing too much financial information?

Are there charges registered that should be satisfied?

Is the correct name registered with the CRO?

Is our share capital, shareholders and officers details up to date?

Is our registered office address correct?

Minutes:

Are our minute books up to date and do they adequately reflect decisions made by both directors and shareholders?

Have the minutes been signed correctly and were the minimum number of members present?

Statutory registers:

Do we have statutory registers that reflect the history of the company from incorporation to date?

Does the information in the registers agree with the records held at the CRO and the details contained in the statutory financial statements?

Although sometimes seen as burdensome for a small company, having good corporate governance practices in place specifically around the holding of meetings and the maintenance of minute books and registers is essential in times of growth where there may be the possibility of additions to the board or external investors. It is generally only on the potential sale of an entity when a due diligence is being performed that procedures relating to records, minutes and registers are put under the spot light.

The change and upheaval in our economic environment over the last number of years has seen companies becoming more focused on mitigating risk and has heightened awareness of the need to have good corporate housekeeping.

Asking yourself a few questions around the three key areas outlined above will highlight the areas that may need to be addressed to ensure annual statutory compliance. Deloitte’s Corporate health check-list should be of use to your organisation’s directors in ensuring compliance to statutory regulations.

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see About Deloitte for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms.